Available options for global investments

Having understood the benefits of global diversification (see prev. post – Why should you diversify your portfolio globally?), here is a list of the various options available for investors.

Mutual Funds

Global mutual funds offer a quick and relatively inexpensive way to diversify, especially for small investors who do not have a substantial sum to spare. Almost all asset management companies have an international fund available for investment. Here is a list of the top 10 global funds and their last 3 years average performance as on 16/04/2013.

Fund Returns (%)*

ING Global Real Estate Retail 17.31

L&T Global Real Assets 12.00

Birla Sun Life International Equity Plan A 11.70

Kotak Global Emerging Market 9.98

JP Morgan Greater China Equity Off-shore 9.04

Goldman Sachs Hang Seng BeES 8.88

Sundaram Global Advantage 8.85

DWS Global Thematic Offshore 8.33

Principal Global Opportunities 8.11

Franklin Asian Equity 7.34

*Source- Value Research online

Global ETFs

Global ETFs or Exchange Traded Funds offer an exposure to the world’s major economies in a single easy-to-trade security. Since they are diversified both by geography and by sector, these ETFs are one of the best ways to diversify any stock portfolio. There are several types of ETFs available for investment. Some of them invest across different asset classes, while some focus only on specific ones like equity or debt etc. The National Stock Exchange (NSE) offers the following two ETFs based on world indices-

High Net Worth Individuals and the rich class who have business interests overseas or kids studying abroad having been investing in property there for years now, with Singapore, Malaysia, New York, Dubai being the popular destinations. And a majority of them have provided them good returns too, in terms of capital appreciation. Resident Indians are allowed to remit up to $200,000, which is over Rs.1 crore out of the country per financial year. But, certain countries have restrictions on real estate investment, Hence it is advisable to study the regulations which govern real estate transactions.

Others

There are other options which are less commonly used compared to those mentioned above and used by the affluent class- buying stocks and trading in currencies and commodities directly through exchanges abroad. Some high earning top management employees also invest in their own parent company based overseas.

Where you cannot invest

Resident Indians cannot make remittances to Bhutan, Nepal, Mauritius or Pakistan under the USD 200,000/- per year allowable scheme. Another area where one cannot use it is to buy multi -million dollar prized lottery tickets and in sweepstakes. Now, this could actually be a blessing in disguise, as most of them are fake and fraudulent anyways 🙂